KOSPIElectronic Components011070

LG Innotek

₩573,000▼ 1.88%2026-10-02 close

Market Cap

₩13.6T

Turnover

₩90.1B

Volume

160,000 shares

Shares out.

23.7M

PER

20.1×

PBR

2.1×

EPS

₩28,023

Dividend Yield

0.33%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,880 per share · Prices as of the 2026-10-02 close

Report overview

iPhone Peak Season and AI Substrates: Two Axes Under Test

LG Innotek is entering the camera-module peak season while expanding semiconductor substrate capacity, with a first-half 2026 recovery in operating margin sitting alongside heavy reliance on a single Apple-linked customer.

1
First-half 2026 revenue reached KRW 11.06 trillion, the company's first half-year above KRW 10 trillion, while half-year operating profit of KRW 541.0 billion came close to the KRW 665.0 billion earned in all of 2025.
2
The annual operating margin fell from 6.5% in 2022 to 3.0% in 2025, but quarterly margins recovered to about 5.3% in 1Q26 and 4.4% in 2Q26.
3
Concentration remains: in the first half of 2026, sales to a single customer in the optics and package units were KRW 8.84 trillion, or 79.9% of total revenue.
4
The package solution unit targets KRW 3 trillion in revenue by 2030, split between a new Haiphong plant in Vietnam (broke ground July 2026, completion targeted May 2027) and Gumi as the mother factory.
5
Sensing modules for robotaxis and humanoids are at an early revenue stage, with the August 2026 camera module supply deal for Amazon's Zoox as the flagship case.

Business structure

LG Innotek runs three main units: Optics Solution (smartphone camera modules), Package Solution (semiconductor substrates) and Mobility Solution (vehicle components). Optics dominates, accounting for 84.0% of revenue in 2024, 83.6% in 2025 and 83.3% in the first quarter of 2026.

First-half 2026 optics revenue was KRW 9.13 trillion, of which exports were KRW 9.07 trillion, or 99.3%, and sales to one customer in the same period were in the high KRW 8 trillion range.

The company does not disclose the customer's name, though the industry assumes Apple, and a company official said in December 2025 that roughly 90% of optics revenue comes from Apple-bound camera modules, concentrating earnings in the fourth quarter.

Its technical position rests on high-value modules: when Apple first adopted a folded-zoom camera in the iPhone 15 Pro Max in 2023, LG Innotek was the sole supplier, and for the variable aperture debuting on the iPhone 18 Pro and Pro Max main camera, Chinese firms Sunny Optical and Luxshare supply the actuators while LG Innotek and Cowell assemble the modules.

The package unit covers RF-SiP, FC-CSP and FC-BGA, posting second-quarter 2026 revenue of KRW 498.4 billion, up 20% year on year, with FC-BGA shipments to global customers also rising.

Mobility centers on vehicle camera, telematics and lighting modules plus vehicle AP modules, with second-quarter 2026 revenue of KRW 510.9 billion, up 10% year on year and an order backlog of KRW 19.2 trillion as of end-2025.

Competition splits between volume and price rivalry with Chinese camera module makers and capacity rivalry with Samsung Electro-Mechanics and Japanese and Taiwanese incumbents in substrates, where the company is still seen as a latecomer in AI server FC-BGA.

Earnings trend

Quarterly revenue · Operating profit

₩3.9T₩11.4B25Q2₩5.4T₩203.7B25Q3₩7.6T₩324.8B25Q4₩5.5T₩295.3B26Q1₩5.5T₩245.8B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩19.6T₩1.3T2022₩20.6T₩830.8B2023₩21.2T₩706B2024₩21.9T₩665B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩3.9T	₩11.4B	0.3%
2025Q3	₩5.4T	₩203.7B	3.8%
2025Q4	₩7.6T	₩324.8B	4.3%
2026Q1	₩5.5T	₩295.3B	5.3%
2026Q2	₩5.5T	₩245.8B	4.4%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩19.6T	₩1.3T	₩976.9B	6.5%	22.9%	129.6%
2023	₩20.6T	₩830.8B	₩565.2B	4.0%	12.0%	137.7%
2024	₩21.2T	₩706B	₩449.3B	3.3%	8.4%	112.5%
2025	₩21.9T	₩665B	₩341.3B	3.0%	5.9%	107.0%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

Revenue rose gradually from KRW 19.59 trillion in 2022 to KRW 20.61 trillion in 2023, KRW 21.20 trillion in 2024 and KRW 21.90 trillion in 2025, but profits moved the other way.

Operating profit fell for three straight years, from KRW 1.27 trillion in 2022 (6.5% margin) to KRW 830.8 billion in 2023 (4.0%), KRW 706.0 billion in 2024 (3.3%) and KRW 665.0 billion in 2025 (3.0%), while net profit attributable to owners slid from KRW 565.2 billion in 2023 to KRW 449.3 billion in 2024 and KRW 341.3 billion in 2025.

In short, the top line grew while unit margins were shaved, a pattern that persisted through 2025.

Quarterly data show both seasonality and recovery: in the second quarter of 2025, revenue of KRW 3.93 trillion produced only KRW 11.4 billion of operating profit and a KRW 8.7 billion net loss to owners, whereas peak-season fourth-quarter 2025 revenue of KRW 7.61 trillion delivered KRW 324.8 billion of operating profit.

Into 2026, first-quarter revenue was KRW 5.53 trillion with KRW 295.3 billion operating profit (about 5.3% margin) and second-quarter revenue KRW 5.53 trillion with KRW 245.8 billion (about 4.4%), keeping margins above 4% even in the off season.

Cumulative first-half revenue of KRW 11.06 trillion was the company's first half-year above KRW 10 trillion, and half-year operating profit of KRW 541.0 billion approached the full-year 2025 figure.

By unit in the second quarter of 2026, optics revenue was KRW 4.52 trillion (up 48% year on year), package solution KRW 498.4 billion (up 20%) and mobility KRW 510.9 billion (up 10%).

Cash flow and the balance sheet also improved in direction: operating cash flow rose from KRW 1.11 trillion in 2024 to KRW 1.33 trillion in 2025, the debt-to-equity ratio fell from 137.7% in 2023 to 112.5% in 2024 and 107.0% in 2025, and the company said the ratio stood at 87.2% at end-June 2026 with borrowings down to KRW 2.16 trillion.

Two caveats belong in any reading: the second-quarter 2026 figures were disclosed as preliminary numbers not yet reviewed by an external auditor, and much of the profit is tied to one customer's new product cycle.

Industry analysis

End demand runs on two tracks. In smartphones, the mix is shifting toward premium models: the iPhone 18 Pro and Pro Max carry a variable aperture for the first time in iPhone history, a technically demanding, high-value part.

SK Securities said in an August 2026 article that the North American customer's annual shipments should rise from about 240 million units in 2025 to 250 million in 2026, and that a Pro-centric second-half lineup is favorable for LG Innotek.

On the other side sits cost pressure: TrendForce projected that the bill of materials for the 256GB iPhone 18 Pro would rise about 38% versus its predecessor, with memory's share of component cost climbing from roughly 10% a year earlier to about 34%, and above 40% in the first half of next year.

The substrate cycle is tight alongside AI capital spending. The company said big tech AI investment is driving a surge in FC-BGA demand and specification upgrades, and that its Gumi substrate lines are running near full capacity.

On pricing, management said it has been negotiating and implementing substrate price increases with major customers.

Competitive positioning differs by unit: both Samsung Electro-Mechanics and LG Innotek decided in the first half of 2026 to expand substrate plants at their Vietnamese subsidiaries, with Samsung Electro-Mechanics receiving its Vietnamese investment certificate in April.

In camera modules, early command of high-value technology is the defense line, yet the structure in which Chinese firms supply variable-aperture actuators and rivals such as Cowell also assemble modules leaves room for volume reallocation within the supply chain.

Outlook

Management's third-quarter guidance points to peak season.

LG Innotek said third-quarter optics growth would be led by expanded mass production of new smartphones and higher automotive camera shipments, while package solution should benefit from mobile RF-SiP and high-performance memory FC-CSP demand plus FC-BGA capacity additions, and mobility from premium telematics and lighting modules and vehicle AP module sales.

On timing, Apple is set to unveil the iPhone 18 Pro and Pro Max at a September 9 event local time, with the standard model planned for the first half of 2027, which shapes when volumes land across quarters.

Per FnGuide as of September 2, 2026, the consensus third-quarter operating profit estimate is KRW 311.2 billion, up 52.7% from KRW 203.7 billion a year earlier.

Substrate expansion timelines are specific: the Haiphong plant in Vietnam broke ground in July 2026 for completion in May 2027, spanning about 330,000 square meters and producing RF-SiP, FC-CSP and FC-BGA.

The company said the investment totals about KRW 1 trillion, with the first phase covering RF-SiP and FC-CSP and a second phase for FC-BGA capacity under discussion with customers, and that it will supply network AI server substrates from the second half while targeting 2027 mass production for training and inference substrates.

Medium-term goals include KRW 3 trillion of package solution revenue in 2030 and KRW 1 trillion of operating profit in 2031 and FC-BGA revenue above KRW 1 trillion by 2030.

In new businesses, the company announced on August 27, 2026 a multi-year supply of 5-megapixel robotaxi camera modules to Amazon's Zoox, and in July disclosed cooperation with TDK on next-generation vision sensing and tactile sensing modules for physical AI.

Still, the company said robot-related revenue began appearing in first-quarter results but remains negligible at the sample-supply stage, and large-scale vision sensing orders are expected around 2027 to 2028.

Valuation

PER

20.1×

PBR

2.1×

ROE

11.4%

EPS

₩28,023

BPS

₩269,210

Dividend per share

₩1,880

The first thing to note is that earnings-based multiples swing widely depending on where in the profit cycle they are measured.

Net profit attributable to owners was KRW 341.3 billion in 2025, but the four quarters from the third quarter of 2025 through the second quarter of 2026 sum to KRW 663.1 billion, nearly double, so the multiple derived at any given share price differs by roughly half.

Against book value the shares trade at a premium to net assets, which can be read as expectations for growth businesses such as substrates and sensing rather than the asset multiple of a mature component maker.

The dividend is modest, leaving the yield low, and cash is allocated first to capital expenditure such as the Vietnam and Gumi expansions rather than to payouts.

For reference, KB Securities said in a May 2026 report that leading global substrate peers were trading at an average of about 59 times estimated 2026 earnings and 10 times book value.

Ultimately the question is whether the margin recovery seen in the first half holds beyond peak season and whether the substrate unit's profit contribution expands in line with company targets.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Higher ASPs from high-value camera adoption

The variable aperture debuting on the iPhone 18 Pro and Pro Max is a technically demanding, high-value part expected to lift average selling prices and support profitability.

Because the new technology raises manufacturing difficulty, the industry expects LG Innotek's share of main camera supply to rise, and the company was the sole supplier when folded zoom was first adopted.

Kyobo Securities said the optics peak season has arrived, citing higher second-half shipments, rising share in main and sensing cameras, and ASP gains from the variable aperture.

AI substrate capacity build and pricing leverage

The company said its Gumi substrate lines are running near full capacity and that capacity additions are needed to match market growth. It is discussing investment and capacity expansion for FC-BGA with two customers, and says the number of customers seeking long-term supply agreements in substrates has risen sharply.

Management also said price increases reflecting higher raw material costs and greater process difficulty are being agreed with customers. These factors bear directly on the room for improvement in package solution utilization and margins.

Expansion into automotive and physical AI

Mobility Solution had an order backlog of KRW 19.2 trillion as of end-2025, building a long-dated revenue base. The Zoox robotaxi camera module supply illustrates the shift from mobile-centric cameras into autonomous driving parts, announced as Zoox ramps paid driverless services.

Vehicle AP modules are already being supplied to a global semiconductor company with additional customers being pursued, and the company is co-developing a humanoid robot vision sensing system with Boston Dynamics.

Bear factors

Single-customer dependence and seasonal skew

In the first half of 2026, sales to a single customer in the optics and package businesses were KRW 8.84 trillion, or 79.9% of total revenue of KRW 11.06 trillion; the company withholds the name, but the industry assumes Apple. Under this structure, the new product cycle and volume allocation drive results.

In the second quarter of 2025, revenue of KRW 3.93 trillion produced only KRW 11.4 billion of operating profit and an KRW 8.7 billion net loss to owners, while fourth-quarter 2025 revenue of KRW 7.61 trillion was nearly double that second-quarter level.

Analysts also note the asymmetry that component makers have few revenue paths outside finished-product sales volumes.

Set cost inflation feeding into demand

TrendForce projected the 256GB iPhone 18 Pro's component cost would rise about 38% versus the prior model, pointed to memory prices as the main cause, and judged an iPhone price increase unavoidable. Demand shifts from higher prices are a variable for Korean suppliers with high single-customer exposure.

In an earlier case, a model whose shipments fell short led to sharp component production cuts and concerns that already-built cameras and displays would become sunk costs.

Latecomer position and investment burden in substrates

LG Innotek is still regarded as a latecomer in the AI server FC-BGA market. About KRW 1 trillion is earmarked for the Vietnam plant and additional investment is under consideration at Gumi, so capital spending pressure continues.

Rival Samsung Electro-Mechanics also decided on Vietnamese substrate expansion in the first half of 2026 and received its investment certificate in April, so capacity races run in parallel. If new capacity does not meet demand on schedule, depreciation would hit margins first.

Risk factors

Customer concentration and supply-chain reallocation

Variable-aperture actuators are supplied by China's Sunny Optical and Luxshare, and module assembly involves Cowell as well as LG Innotek. If the customer reallocates volumes across multiple vendors, both share and pricing leverage could shift.

Apple said in April 2026 that hardware engineering chief John Ternus would become its next CEO, a role he assumed on September 1, and observers suggest an engineer-led Apple may demand even tighter hardware execution.

Execution and demand mismatch on new capacity

The Haiphong plant is slated for completion in May 2027 and training and inference server substrates target 2027 mass production, so results will take time to verify. The company says the first plant will be dedicated to RF-SiP and FC-CSP, with customer prepayments reflected in the investment.

Delays in completion or ramp, or a slowdown in AI server investment, could open a gap versus the target trajectory.

FX, overseas production and financial structure

In the first half of 2026, 99.3% of optics revenue was booked as exports, so currency moves pass directly into earnings. Production is also heavily offshore: a dual-site strategy places commodity products in Vietnam and high-value products in Gumi, exposing the company to local labor, logistics and policy variables.

Financially, the debt-to-equity ratio fell from 137.7% in 2023 to 107.0% in 2025, but absolute borrowings remain in the trillions of won while large expansions proceed in parallel.

What to watch next

September 9, 2026 (local time)
Apple unveils the iPhone 18 Pro and Pro Max at its product event. The final variable-aperture specification and initial reception feed directly into optics pricing and volume recognition.
Late October 2026
At the third-quarter results, compare actual operating profit and optics margin against the consensus of KRW 311.2 billion (FnGuide, as of September 2, 2026), and check how far the FC-BGA capacity effect management flagged for package solution shows up.
Fourth quarter of 2026
Watch whether the network AI server substrates the company said it would begin supplying in the second half actually start shipping, and whether the additional domestic investment under review after the KRW 600 billion Gumi agreement is confirmed. The completion timing of the KRW 100 billion Gwangju plant extension adding a vehicle AP module line is also worth tracking.
Late January 2027
Fourth-quarter and full-year 2026 results will show peak-season revenue and margins along with the annual dividend decision. The benchmark is how far profit recovered against 2025 operating profit of KRW 665.0 billion.
May 2027
The Haiphong substrate plant is scheduled for completion; adherence to that schedule and confirmation of the second-phase FC-BGA investment under discussion with customers will shape the path to package solution targets.

Overall view

LG Innotek's revenue grew after 2022 while its operating margin fell from 6.5% to 3.0%, and in the first half of 2026 it posted revenue of KRW 11.06 trillion and operating profit of KRW 541.0 billion, lifting quarterly margins back into the 4-5% range.

With second-quarter 2026 optics revenue up 48% year on year to KRW 4.52 trillion, the recovery engine remains camera modules, while the structure of 79.9% of first-half revenue coming from one customer persists in parallel.

Bullish elements include ASP gains from the first-ever variable aperture in the iPhone 18 Pro lineup, expansion of substrate lines already running near full capacity, and application broadening such as robotaxi camera modules for Zoox.

Bearish elements include set cost inflation from surging memory prices and the resulting expectation of higher handset prices, seasonal skew, and a latecomer position in AI server FC-BGA.

The balance sheet has moved in a better direction, with debt-to-equity falling from 137.7% in 2023 to 107.0% in 2025 and 87.2% at end-June 2026, yet with trillion-won expansions under way, cash allocation priority sits with capital expenditure.

What needs checking is whether margins hold after peak season and whether package solution profit contribution moves onto the company's stated path of KRW 3 trillion of revenue in 2030 and KRW 1 trillion of operating profit in 2031. This report is for information purposes only and contains no buy or sell opinion.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.